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Competitiveness workshop puts issues in sharp relief

USDA’s and the U.S. Department of Justice’s first-ever joint public workshop on competition and regulatory issues in the agriculture industry appears to have struck a nerve.

The workshop, which some dismissed in advance as a “dog and pony” show, attracted nearly 800 participants, many of them farmers who came from as far away as Alabama and Washington state for a chance to speak.

It also drew a fair number of public relations types and other staff members for some of the entities that could have reason to be concerned if the Obama administration decides to broaden its antitrust activities into the seed and meat processing industries.

Attorney General Eric Holder, Agriculture Secretary Tom Vilsack and other Department of Justice and USDA officials who attended the workshop, which was held at a community college in Ankeny, Iowa, were noncommittal about future actions by the DOJ’s Antitrust Division, which is headed by Assistant Attorney General Christine Varney.

“You know I don’t want to link investigations that we undertake to the workshop, but just becoming more knowledgeable about how an industry works can lead to action,” Varney told reporters attending a press briefing held at the workshop.

She noted the Antitrust Division recently filed a lawsuit in Milwaukee, Wis., challenging Dean Foods’ April 2009 acquisition of Foremost Farms USA’s consumer Products Division. The attorney generals from Illinois, Michigan and Wisconsin joined in the filing of the lawsuit, which was aimed at preventing “undue consolidation” in dairy processing.

“I think you’ll see more developments like these in the future,” she said. “You know mergers come to us. We don’t organize the mergers. They come in and understanding the entire dynamic and economic underpinning up and down the marketplace helps us to more fully analyze the merger.”

“You should not assume that because we are having these workshops that we are not doing anything,” said Holder, responding to a question from a reporter about when the Justice Department would take specific action on complaints about concentration.

“This Department of Agriculture, this Department of Justice, we have been aggressive. One of the ways these workshops will help us is to refine what we’re doing, to calibrate our efforts and help us identify what we need to target. What you should not take from these meetings is that we are simply sitting on our hands. We are acting right now.”

Farmers and ranchers have expressed concerned over the level of competition within the industries that supply seed and biotechnology traits and process the livestock raised on their farms and ranches. Speakers noted that four companies now process 80 percent of the beef consumed in the United States.

Two of the companies that provide a major portion of the corn and soybean seed planted in the U.S. – Monsanto and Pioneer – are now involved in a lawsuit over the use of “stacked” traits in Pioneer’s soybeans that already contain the Roundup Ready gene.

Although Monsanto was referenced in several discussions during the day-long workshop, not everyone was ready to condemn the company for its gradual rise to dominance in the seed industry. (Roundup Ready corn is now planted on nearly 80 percent of the acres in the U.S.)

Ray Gaesser, a corn and soybean farmer from Corning, Iowa, and a vice president of the American Soybean Association, noted that without the new seed traits provided by Monsanto, U.S. farmers would not be as competitive in world markets as they are today.

“While supporting innovation, ASA also supports competition in all sectors of U.S. agriculture in order to enhance efficiency and reduce costs to soybean producers,” Gaesser said. “As we have examined issues around seed industry innovation and competition, there is uncertainty in the marketplace surrounding the process to ensure that foreign registrations for biotech traits are maintained once they go off-patent and become generic and on other issues.”

Other speakers said the concentration among buyers and processors of beef, pork and poultry are responsible for a portion of the downturn in those sectors.

“I’m here to tell you our current price discovery system for finished cattle and hogs is absolutely broken,” said Jim Foster, a hog producer from Montgomery city, Mo. “At least 90 percent of all market ready hogs are on the packer’s doorsteps with little competitive bidding.”

Vilsack and Holder said the degree of collaboration between the Departments of Justice and Agriculture in putting on the series of workshops – four more are scheduled later this year – is unprecedented.

“It’s been more than a century since the Sherman Antitrust Act became law, and nearly 90 years since the Packers and Stockyards Act entered the books,” said Holder. “In that time, not once have our nation’s Departments of Justice and Agriculture come together for a public discussion on competition and regulatory issues in your industry.”

Vilsack said the outcome of the hearings is closely tied to the fate of rural America.

“In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like,” said Vilsack. “These issues are difficult and complex, which is why this workshop today is so important and long overdue.”


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